Get back VAT paid before you registered

If you have recently started in business or have been trading a couple of years you may well already be VAT registered or considering VAT registration – see my other article on voluntary registration – It’s quite possible that you incurred VAT on equipment products or services before you actually commenced trading is there anyway you can claim this VAT back ? The answer is yes and here is how it works.

If you are already registered for VAT or are about to be then on your first return you can include in your input tax claim the VAT you incurred on equipment and products going back 4 years and VAT incurred on services going back 6 months from your date of registration. There is a condition though, the products and equipment must still have been in your business on the date of registration. Also HMRC can reduce the amount of the claim on equipment used in the business to take account of wear and tear.

The second option is much more unusual although I did use it for a client of mine recently. This involves backdating the effective date of registration which again can be up to 4years. This is unusual because the business would need to account for VAT on the sales in that period. So this is an option only for businesses who have zero rated sales.

This is quite a complicated area and specific cases need careful study but if you need further advice please feel free to contact me.